INSIGHT: Grabbing cracking opportunities

01 October 2007 17:47  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--Cracking news from the first full day of the 41^st European Petrochemical Association meeting shows in sharp contrast how players in different regions and stages of development are exploiting investment opportunities to further their growth.

Reliance will make use of refinery feeds from its world scale Jamnagar refinery for petrochemicals but the final structure of the $3bn project is not yet clear. The plan will involve a 1.3m tonne year cracker and 700,000 tonnes/year of propylene production.

An on-stream date of 2010 to 2011 has been suggested but looks ambitious.

This business is all about grasping opportunities when and where you can and Reliance has many as its brand new refinery comes on-line around 2009.

But in Europe, and in now in North America, companies have to take a different view.

That Europe is not going to see a new cracker for years is the underling message from most participants in the business. But Europe still needs ethylene and propylene to supply some growth.

To that end, Shell’s decision to invest further in Moerdijk to crack heavier hydro wax feed makes a great deal of sense.

Shell has a “strategy for the heartlands” in chemicals that applies to Europe and the US. Regional chemicals growth is not expected to be spectacular but will need efficient and reliable olefins suppliers. You can see Shell's Graham van't Hoff explain the rationale here. The focus for Shell is on asset integrity and maintaining performance over the longer term.

Running its downstream businesses, including chemicals and refining, much more closely together is changing things at Shell.

Hydro wax feed for the Moerdijk cracker will be taken from the nearby Pernis refinery to start with but the chemicals business may be able to tap in to other refinery sources.

Shell has been thinking about introducing more feedstock flexibility into Moerdijk and to tap into the availability of lower cost feed for some time. Its decision now follows on from the $150m spend on the cracker in the most recent maintenance turnaround on turbines and other equipment peripheral to the cracker itself.

Alongside the cracker furnace re-builds Shell is investing in Pernis IPA (isopropyl alcohol) and flexible polyols further evidence of a company in Europe investing to service vitally important local markets.

Cracker operators in Europe face different issues at different plants across the continent but have to decide how to best maintain plants which typically are decades old.

In Scotland, for instance Shell and Exxon Mobil have to find new sources of gas feedstock for their 30 year old joint venture cracker at Mossmorran. Shell’s vice president for base chemicals in Europe, Graham van’t Hoff says, however that the future of the plant is being secure post 2020.

In Europe, opportunities for investment and for growth increasingly are of a more local, indeed focused nature. That is why the results of EPCA’s research on Europe’s chemicals production ‘cluster’ to be presented on Tuesday 2 October, sound so interesting.

Europe will maintain its power in petrochemicals by judicious localised investment. The big bang projects are a thing of the past.

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